TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 259
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....62,480/- in his account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited. The Assessing Officer, therefore, initiated proceedings u/s 147 of the Act after recording reasons and issued notice u/s 148 of the Act on 31.03.2021. The assessee in response to the notice issued u/s 148 of the Act filed his return of income on 29.12.2021 declaring total income of Rs. 6,86,590/-. The Assessing Officer thereafter issued statutory notices u/s 143(2) and 142(1) of the Act along with a detailed questionnaire. 3. During the course of assessment proceedings the Assessing Officer specifically asked the assessee to submit the source of cash deposit of Rs. 52,62,480/- in the account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited. The assessee in response to the same submitted that the cash deposit of Rs. 52,62,480/- in the bank account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited includes cash, cheque, RTGS, etc and pertains to his business activity. It was submitted that the assessee has offered the income in the return filed in response to the notice u/s 148 of the Act. However, t....
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.... that where there were huge cash deposits in accounts of the assessee and, though assessee claimed that cash deposits were on account of commission business, however, failed to establish source of cash deposits in his bank account, addition made against In the case of ACIT vs Kumar Ice (1999) reported in 237 ITR (AT) 1 (Patna), it is held that if the assessee had not been able to satisfactorily prove the source or nature of certain sums of money received by him during the accounting year, the officer is perfectly justified in drawing an inference that the receipts are undisclosed income. The Hon'ble Supreme Court in the case of Rupal Jain Vs CIT reported in 454 ITR Page 813 has held that where the assessee though had disclosed the source of deposit, but could not establish the nature thereof, three conditions required to be proved by the assessee as per Section 68 could not be proved and thus, such deposit was rightly treated as unexplained credit u/s 68. The Hon'ble Supreme Court in the case of Kale Khan Mohammad Hanif vs CIT (1963) reported in 50 ITR 1 held that if an assessee fails to prove satisfactorily the source and nature of certain amount....
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.... and Profit and Loss A/c are not enough to explain the sources for the cash deposit. It has to be explained with material evidence showing the generation of cash/fund flow with reference to the cash deposit made. Whereas, in the instant case, the appellant has failed to upload the sources for the cash deposit made into the bank a/c. Keeping in mind the cash deposit made in the bank accounts, the statement of facts submitted at the time of filing appeal, the assessment order, case laws and grounds raised, I find that there is no merit in the grounds raised by the appellant. Considering the factual matrix involved in the case, the addition made is upheld and the grounds raised by the appellant are dismissed. 5. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal by raising the following grounds: 1. On the facts and in the prevailing circumstances of the case and in Law, Respected CIT(A)-NFAC erred in confirming the addition made in the assessment order passed by the Ld. Assessing Officer without considering the fact that the Ld. Assessing Officer failed to dispose the objections of the assessee against the reasons reco....
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....aydev Mahadev Arya vs. ITO vide ITA Nos.1271 to 1273/PUN/2025 order dated 16.02.2026 for assessment year 2013-14 to 2015-16, he submitted that the Tribunal in the said decision has adopted the net profit of 2% on the deposits made into the bank account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited. He submitted that the assessee in the instant case has already declared higher profit which comes to more than 7.5% of the total deposits, therefore, no further addition is called for. 7. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that the onus lies on the assessee to substantiate with evidence to the satisfaction of the Assessing Officer regarding the nature and source of cash deposits made in the bank account maintained with Shri Renukamata Multi State Urban Co-operative Credit Society Limited. However, the assessee in the instant case has failed to discharge the onus cast on him. Therefore, the Ld. CIT(A) / NFAC was fully justified in sustaining the addition made by the Assessing Officer. 8. We have heard the rival arguments made by both the sides, perused the ....
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....5,000/- being cash deposit made by the assessee in his account maintained with M/s. Renuka Mata Multi State Urban Co-operative Society Credit Ltd. The explanation of the assessee that he has maintained books of account and got the accounts audited under the provisions of the Act and that being a commission agent he used to receive advance from the customers for making purchase of agricultural produce from Latur Market Yard on their behalf, was rejected by the AO in absence of any documentary evidence to prove such purchases. We find the Ld. CIT(A) / NFAC upheld the action of the Assessing Officer, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the entire deposits made in the bank account maintained with M/s. Renuka Mata Multi State Urban Co-operative Society Credit Ltd. cannot be added and only a percentage of such deposits as commission of the assessee should be adopted since the assessee has never earned such huge income and had got only some commission. It is also his argument that had the assessee earned such huge income, the same would have been represented by some amount or evidence ....
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....in the Bhavnagar Branch, the assessee was generally called and asked to open a new bank account. The Counsel for the assessee submitted that the assessee was given to understand that since the incumbent Branch Manager is required to fulfill it's target of opening new bank accounts, this exercise of opening new bank account in the name of the assessee was required to be carried out. Accordingly, in order to maintain cordial relations with the new Branch Managers, the assessee used to sign whatever documents / papers etc. which were being produced before him in this regard. In all these cases the assessee used to sign blank cheque books and deliver the same to the incumbent Branch Manager as directed. Accordingly, the Counsel for the assessee submitted that though apparently benami and accommodation transactions were carried out by utilizing the above referred accounts open in the name of the assessee, the assessee neither deposited any money in the said accounts and neither did the assessee withdraw any money from the said account. Accordingly, it was grossly incorrect on part of the Assessing Officer and Ld. CIT(A) to hold that the entire amount of bank deposits / credit made in th....
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....ents of the report of the Investigation Wing made available to us, we observe that on the basis of search carried out at the premises of Renukamata Society, the Department had observed that the Renukamata Society had opened and was operating several bank accounts, which had been opened in the name of various depositors, many of which were merely name lenders. As per the Investigation Report, most of the depositors were non-filers of Income Tax Returns. Further, as per Investigation Report, the Department had observed that most of such account holders are person of low means and their financial profiling does not correspond to the high volume of cash deposits in their accounts with the Renukamata Society. Further, as per the report, the Department observed that during Financial Year 2012-13, Renukamata Society had made total deposits in the bank account amounting to Rs. 45,055 crores. The Department observed that on analysis of cash deposits and withdrawals, it is seen that the society is operating on the basis of typical Angadia Model, without maintaining proper documentation regarding identity of persons depositing and withdrawing the cash. The Department observed that the cash de....
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.... Cash deposit made at other than home branch of customers' accounts maintained with SRMUCS (Remote) (c) By transfer from other customers of SRMUCS. (d) By transfer from customer of SRMUCS/ other parties having accounts at Public/ Private sector banks. The amounts so credited were withdrawn by the depositors through following modes: (a) Cash withdrawn from home branch of customers' accounts maintained with SRMUCS. (b) Cash withdrawn from other than home branches of customers' accounts maintained with SRMUCS (Remote), (c) Cash withdrawal by other customers of SRMUCS. (d.) On transfer to customers of SRMUCS/ other parties having accounts at Public/ Private sector banks online/ RTGS/ NEFT, which were later transferred to other accounts or withdrawn as cash. (iii) Money so transferred were used for following purposes: (a) Remitting money abroad with improper/falsified documentation in the garb of imports. (b) Payment of customs duty. (c) Purchase of the bullion or other purchases. (d) Transfer to other parties online/ RTGS/ NEFT (e) Withdrawn by the beneficiar....
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....mafacie, most of the cash deposit is unaccounted and is in the names of the individuals of small or shell companies/entities. The cash so accepted is then deposited by the employees of the Society in the various bank accounts of society (list annexed), and then transferred out as RTGS/NEI'T in accordance with rho instructions of the customers, who bring the cash to the society. In the statement of branch manager of Ahmadabad of the society, he has mentioned few accounts which are being operated on behalf of the employer of account holder. b) The society has also issued Demand Drafts to various walk-in customers in their branches by splitting the cash received to below Rs. 50,000/- in each instance and without taking any KYC details on record. The investigation carried so far shows that Demand Drafts of substantial amount have been issued by the society, after splitting the amount in such a way that each Demand Draft value is less than Rs. 50,000/-. c) From the analysis of cash deposits and withdrawals, it is seen that substantial amounts of withdrawals made are against deposits made in cash at different branches of the society without proper documentation of i....
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...., Dashraihbhai C Khant, Assistant Branch Manager at Bapunagar branch, Ahmadabad has given the details of benami accounts being operated from the branch (please refer the reply to Q. 31 in statement of Dashrathhhai C. Khant). f) Dashrathbhai C. Khant, Assistant Branch Manager at Bapunagar branch, Ahmedabad has given the details of benami accounts being operated from the branch. He has also stated that he is aware of these benami accounts because on few occasions when cash is not available in the branch account holders of such accounts tell him to talk to their employers with respect to cash transactions. The details of such benami accounts are provided by him in reply to Question No 31 in his statement." 14. It would be further useful to reproduce the relevant extracts of the ITAT decision of Ranukamat Multi State Cooperative Urban Credit Society Ltd. in ITA Nos. 4001 & 4002/ Mum/2019, wherein the ITAT made the following impugned observations regarding the modus operandi of Renukamata Society:- "47. Be that as it may, the contents of the report shows that the Ld. DDIT(I&CI) had observed that these account holders were depositing large sums of cash on diffe....
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....orthiness whenever they deposited funds in their respective accounts held with the assessee society. He pointed out that, unlike banks which could flag suspicious transactions in their suspicious transaction report or cash transaction report which they were required to statutorily file with the concerned departments, the assessee society was unable to do so in the absence of any corresponding provision in law. It is noted by us that this absence of statutory reporting obligation/liabilities were also taken note of by the DDIT(I&CI) in their report. The Ld. AR thus submitted that, the absence of statutory reporting liabilities cannot be held against the assessee so as to suggest that the assessee was facilitating such high value cash deposits. To substantiate the bonafides of the assessee society, the Ld. AR showed that the assessee had suo moto written several petitions to the Financial Intelligence Unit (FIU-IND) much prior to the date of search on 09.02.2016 viz., between July 2014 to June 2016 wherein they had time and again requested them to register them with FIU-IND so that they could share the details & information of their members with the concerned Department. He showed us....
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....nquiry/investigation by the Investigation Wing, some tangible material was found to substantiate the fact that the assessee was the provider of accommodation entries and that, the income from commission, ranging from 0.5 per cent to 1 per cent was not disclosed in return and thereby, the income chargeable to tax had escaped assessment for the year under consideration. As emerges from the record, the petitioner has filed Rol for the assessment year 2012-13 disclosing income of Rs. 1.42,694 despite showing a huge turnover of Rs. 24,10,82,501 in the audited books of account. Further, a detailed investigation is carried out by the Investigation Wing and the outcome of the same prima facie substantiates the case of the department. Thus, formation of belief by the Assessing Officer that the income chargeable to tax has escaped assessment, based upon material derived during inquiry/investigation, appears to be justified. Thus, the petition failed and dismissed." 17. In the case of PCIT v. Alag Securities (P.) Ltd 117 taxmann.com 292 (Bombay), the High Court held that 0.15% rate of commission offered to tax by the assessee was a reasonable rate in facts of the assessee's case. ....
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....t produce that complete details of beneficiaries with their names, complete addresses, PAN and other details of transactions. In the instant case, there are approximately more than 7000 beneficiaries and only in the case of 116 beneficiaries, the PAN has been identified. For 2752 entries, PAN has not been identified. For balance entries, only part details are available. If the assessee is submitting that he is liable to be taxed only on the commission income so earned, then the onus is on the assessee to provide the basis as to how such commission income has been arrived at and list of beneficiaries and other details so that whether the correct amount of "commission income" has been offered to tax may be verified by the Department. The Department cannot be expected to find out the details of all beneficiaries itself and cannot accept whatever income or expenses are offered/claimed by the assessee, without the assessee providing any methodology of arriving at the same along-with supporting evidence viz. details of beneficiaries, details of middlemen, basis of arriving at commission etc. In the instant facts, the assessee has submitted that he was operating through middlemen and does....
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.... bank account held by the assessee. In the result, ground number 1 of the assessee's appeal is partly allowed." 21. Accordingly, in the interest of the justice, looking into the instant facts it is held that 0.25% of the deposits / credits made in the bank accounts held by the assessee with Renukamata Society would be the income of the assessee, so as to serve the ends of justice." 14. We find in the instant case also a perusal of the bank account maintained with M/s. Renuka Mata Multi State Urban Co-operative Society Credit Ltd. shows that there are continuous deposits as well as withdrawals in the said account. There is some force in the submission of the Ld. Counsel for the assessee that the Revenue has not found any such investment or lavish expenditure made by the assessee. We find had the assessee earned an amount of Rs. 32,25,000/- as alleged by the Revenue then the same would have been available in some form of assets or investment or lavish expenditure. However, there is no such finding by the Revenue. At the same time, the assessee is maintaining books of account and his accounts are audited and still the deposits and withdrawals in the said bank account....